IRS yanks exemption for groups

Posted: Wednesday, June 15, 2011

By Lee Shearer

The Internal Revenue Service has revoked the tax-exempt status of dozens of Athens-area charities, some of the 275,000 groups nationwide the IRS says have not filed required annual reports for three consecutive years.

A large majority of the groups actually are defunct, according to an IRS review, but some that had their status revoked in the Athens area are very much in business - including organizations such as the Kiwanis Club of Athens Foundation, the Georgia City-County Management Association and Athens-Clarke County Crimestoppers, which offers rewards for tips leading to the arrest and conviction of criminals.

A 2006 federal law called the Pension Protection Act requires most tax-exempt organizations to file an annual report with the IRS, and requires the IRS to automatically revoke tax-exempt status if the group does not file the required information for three straight years.

This was the first year since the law went into effect that a group might have gone three years without filing. The agency did not directly notify organizations of the revocation, but instead issued a list of the 275,000 organizations that lost tax-exempt status.

The Athens chapter of the Georgia Nurses Association was one of several of the association's Georgia chapters listed in the massive IRS database.

Many organizations in neighboring counties also were on the huge list, which amounts to about 14 percent of all nonprofit organizations in the United States, according to the IRS.

A sampling of groups in neighboring counties includes the Barber Creek Volunteer Fire Association and Boy Scout Troop 288 in Oconee County, Veterans of Foreign Wars Post 8377 in Danielsville, Winder Dixie Youth Baseball, the Barrow County Chamber of Commerce Scholarship Fund and the Blue Knights Motorcycle Club of Colbert.

Officers in some of the organizations reacted with consternation this week to the revenue service's announcement last Wednesday - especially after the IRS conceded that some of the organizations on the list had in fact filed the right paperwork.

On Friday, the Chronicle of Philanthropy reported the list contained some errors - listing, for example, the University of Michigan and George Washington University.

The Georgia City-County Management Association, a professional development group for administrators such as county managers, also is on the list, with an Athens address.

"I suspect that's a mistake," said Paul Radford, deputy director of external affairs for the Georgia Municipal Association, which oversees the management association.

"I would be shocked if that were the case," Radford said when he learned the group was on the IRS list.

In fact, the group did file the required documents, Radford determined later. The group reorganized several years ago, and the IRS actually de-listed the older group, he said.

Some of the Georgia Nurses Association chapters on the list are groups no longer active, said Jeremy Arieh, a GNA spokesman. Some chapters may have failed to file their paperwork, however, and state-level GNA officials are working with them to get their tax-exempt status restored, he said.

For the groups that have lost tax-exempt status, the federal agency's move could be costly.

Companies or people who donate to the groups can no longer claim tax deductions for their donations.

And the charities now will have to apply to have their tax-exempt status restored and pay a fee of up to $850 for large organizations.

The IRS said small groups with annual receipts of $50,000 or less would only have to pay an application fee of $100 to have their tax-exempt status retroactively restored.

EDITOR'S NOTE:A previous version of this article gave an incomplete description of the officials helping GNA chapters regain tax-exempt status.